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RBI adopts staggered surplus distribution policy for transferring dividend

Updated : September 03, 2018 07:02:09 IST

The Reserve Bank of India (RBI) on Monday has put its foot down on the issue of big dividend payments to the government.

The central bank transfers the surplus generated from its functions to the government at the end of each financial year, after accounting for any funds transferred to the contingency reserve or the asset development fund. It follows July-June financial year.

The central bank, which released its annual report recently, highlighted that it was adopting a new surplus distribution policy.

The apex bank stated that since continuous transfers and substantial transfers weaken the RBI's balance sheet, going forward, it will have to consider its own provisioning requirements, before transferring the annual surplus to the government.

However, the government is not on board on this suggestion.

Earlier, RBI said transfer of surplus to the government rose by 63.08 percent to Rs 50,000 crore during the financial year ended June 30, 2018. It had transferred a surplus of Rs 30,659 crore to the government in financial year 2016-17.

Under the RBI Act, 1934, the central bank is required to pay the government its surplus after making provisions for bad and doubtful debts, depreciation in assets and, contribution to staff and superannuation fund among others.
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